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Stocks mixed in sluggish trading


NEW YORK -- U.S. stocks were mixed yesterday in sluggish trading as gains in technology issues tempered concern about a slowdown in earnings growth.

Shares of semiconductor and software companies continued an eight-month rally amid optimism that demand for their products will remain strong no matter how the economy fares. Takeover speculation after International Business Machines Corp.'s bid this week to acquire software company Lotus Development Corp. helped to fuel the advance.

"People are consuming more technology every single day, and that's not going to reverse itself," said Charles Crane, director of research at Spears, Benzak, Salomon & Farrell Inc., which manages $3.3 billion. "It's not just PCs -- cars now have more chip-generated functions."

Concerns about the economy grew, though, after Federal Reserve Chairman Alan Greenspan's remarks yesterday on the U.S. experiencing a "pronounced" slowdown. At the same time, chances of a big downturn have "decreased very significantly."

The Dow Jones industrial average seesawed, closing down 3.46, at 4,458.57, after rising as much as 6.91 points earlier. Shares of Caterpillar Inc., Boeing Co. and International Paper Co. rose, while Philip Morris Cos., DuPont Co. and Eastman Kodak Co. fell. The 30-stock average is up 16.2 percent this year.

Mr. Greenspan's mixed assessment clouded the outlook for interest rates, which investors were betting would fall as growth slowed and the Fed sought to stimulate the economy. Lower rates would lower the cost of borrowing, boosting corporate profits and consumer spending.

"Everyone expected an easing, but now people are reading the comments to mean they won't do anything as fast as originally thought," said Todd Clark, senior block trader at Rodman & Renshaw Inc. Mr. Greenspan's comments "brought people a pause about the next move in rates."

Stocks rallied to record highs through the first five months of this year amid expectations that earnings would continue to grow and interest rates would fall. Recent reports showing a drop in employment and slower overall economic growth have dimmed optimism that earnings will continue to move higher.

"The question which has not been answered is what the Fed will do at its July meeting," said Hugh Johnson, chief investment strategist at First Albany Cos. "What they do will depend heavily on June employment data."

The Fed's actions will also be affected by the Producer Price Index, which the Labor Department will release today. That's one reason trading was relatively subdued yesterday, said Greg Nie, technical analyst at Kemper Securities Inc.

The Dow industrials traded in a 16.25-point range, the narrowest since the average swung 13.8 points on May 16. The Standard & Poor's 500 index barely budged -- from a low of 531.65 to a high of 533.56 -- before closing down 0.78, at 532.35. The 1.91-point range was the narrowest since April 3. Less than 292 million shares traded hands on the New York Stock Exchange, well below the average 338.64 million over the past three months.

In the S&P; 500 index, shares of electric utilities, tobacco and bank shares fell, while semiconductor, beverage and long-distance stocks rose the most. The drop in tobacco stocks was led by Philip Morris. The New York Times reported yesterday that the company studied the effects of nicotine on the human body for 15 years and found it affected the brain, behavior and body of smokers. The stock fell $1.625, to $71.375.

The Nasdaq composite index bucked the trend, rising as technology stocks gained. The index climbed 4.55, to a record 886.13, eclipsing its previous all-time high recorded on Monday. The advance was led by Tele-Communications Inc., Intel Corp., Cisco Systems Inc., and Adobe Systems Inc.

Trucking stocks fell after some haulers said they expect disappointing financial results in the second quarter because shipments of goods has lagged.

About six stocks fell for every five that rose on the Big Board.

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